Housing affordability is a major political issue at a national and inter-generational level. This is particularly evident in the UK. Between 2001 and 2004, a range of programs directed specifically at key workers were put in place, which included both ownership and rental options.
The government’s current home ownership policies share some features with the earlier key worker schemes, but are open to anyone, subject to income tests. Key worker-specific programs tend to be localised and ad hoc, and are often more focused on rental than on home ownership.
In many cities, key workers occupy a housing affordability gap.Credit:Chris Hopkins
Aware Super (formerly First State Super) announced early this year that it is investing in 55 new key worker affordable rental units six kilometres from Melbourne’s CBD. The rental properties will be available for healthcare, aged care, disability services, teachers, law enforcement, emergency services, childcare and associated industries personnel to rent at 80 per cent of the market rate for the area. This is following Aware Super’s first pilot investment in key worker affordable rental housing in Epping, NSW, in mid-2019. While such investments are positive and welcomed, more policy focus and investment is required to ensure that home ownership in our cities is possible for key workers.
One lesson from the pandemic is that cities should maintain a deployable, scalable, locally based pandemic workforce. Priority roles include nurses (especially ICU-capable nurses), paramedics, medical technicians and contact tracers. Housing or tax incentives, or cash stipends, could be made available to suitably skilled individuals who maintain pandemic training and can be deployed if required, similar to the army reserve.
While a ‘pandemic reserve’ is not directly aimed at addressing affordability, by giving these workers extra income or other incentives, their buying power is improved. In this way, the community can maintain as-needed access to workers who choose to pursue higher incomes.
Another likely post-pandemic trend is ‘decasualisation’ of healthcare workforces. Predominantly casual workforces have been problematic during the pandemic, including due to increased risk where people work at two or more facilities. Healthcare workers are facing significant risks, and demands for greater employment stability – and higher wages – should be expected as a result. In turn, this improves buying power.
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Compared to other occupation categories, key workers are more likely to maintain stable employment during a pandemic. The safe investment features of key worker housing are amplified when the economy is disrupted. If pandemic lockdowns become semi-regular events, the investment characteristics of key worker housing will diverge from other housing development projects, for example student housing. There are a number of existing and emerging models which seek to address housing affordability for key workers.
Despite the current focus on our key workers, it seems unlikely that housing affordability policies at a central government level will shift from affordability generally to key worker housing affordability specifically. This is partly because key workers haven’t suffered the same economic distress as workers in other occupations during the pandemic.
If cities want to localise and future-proof their most essential workforce, innovative local solutions will be key. Governments and developers should work together to support transaction structures which will encourage development of affordable key worker housing in appropriate areas. For developers and investors, key worker focused developments may be among the safest, most bankable projects as we head into the new normal.
Natalie Bryce and Julie Jankowski are partners at law firm Herbert Smith Freehills.
